China LLDPE futures up 1% on bullish crude market

31 January 2011 10:09  [Source: ICIS news]

SINGAPORE (ICIS)--Linear low density polyethylene (LLDPE) futures on China's Dalian Commodity Exchange (DCE) rose 1% on Monday on the back of strong crude futures prices, local futures brokers said.

"Most investors are not keen to take positions before the [Lunar] New Year holidays, but the bullish crude market trigger[ed] some speculative trading,” said Beijing-based Wanda Futures research director Wang Chen.

A lack of arbitrage opportunities for physical cargoes had been capping investors’ interest in the LLDPE futures market, a second futures broker said.

The arbitrage opportunities typically arise when there is a price differential of at least Chinese yuan (CNY) 1,000/tonne ($152/tonne) between the physical and futures market, but based on prevailing import and retail prices, the differential is below that minimum level, the second broker added.

LLDPE imports were assessed at $1,400-1,430/tonne (€1,036-1,058/tonne) CFR (cost & freight) for the week ended 28 January, and imported LLDPE was selling at CNY10,800-11,450/tonne EXWH (ex-warehouse), according to ICIS.

Liquidity was focused on the May contract, which closed at CNY11,820/tonne, according to DCE data. This was CNY120/tonne or 1% higher from Friday’s settlement price, with 294,112 contracts or 735,280 tonnes of material traded, the data showed.

($1 = CNY6.58, $1 = €0.74)

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By: Chow Bee Lin
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